SPEECH 


HON.  FREDERICK  A.  PIKE, 


OF  MAINE 


TAXATION  OF  NATIONAL  BONDS; 


DKUVKKED 


IN  THE  HOUSE  OF  REPRESENTATIVES,  DECEMBER  17,  18G7. 


WASHINGTON: 

PRINTED  AT  THE  CONGRESSIONAL  GLOBE  OFFICE. 
1867. 


-  -«L.'_,/  :  .,,-  ^  VTA 

rf  A        " " 


TAXING  OF  NATIONAL  BONDS. 


SPEECH 


HON,  FREDERICK  A,  PIKE, 

OF  MAINE, 

IN  THE  HOUSE  OF  REPRESENTATIVES,  DECEMBER  17,  1867. 


The  House  being  in  Committee  of  the  Whole  on 
the  state  of  the  Union — 

Mr.  PIKE  said: 

Mr.  CHAIRMAN:  Several  days  since  I  intro- 
duced a  resolution  looking  to  the  taxation  of 
national  bonds,  and  I  propose  now  to  make 
some  brief  remarks  upon  it.  I  prefer  doing 
this  now,  because  when  the  revenue  bill  comes 
before  the  House  for  action  the  brief  time 
allowed  for  discussion  will  not  permit  the 
exhibition  of  this  proposition  in  its  true  light. 
I  shall  then  ask  a  vote  upon  it ;  and  unless 
something  better  is  suggested  meanwhile  to 
compass  the  same  object  I  shall  hope  the  meas- 
ure will  meet  the  approbation  of  the  House. 

In  my  judgment  we  have  already  postponed 
this  taxation  too  long.  In  the  Thirty-Ninth 
Congress  I  urged  the  necessity  of  it.  Then  it 
could  have  been  done  more  readily,  because  it 
had  not  been  the  subject  of  popular  discussion, 
and  consequently  the  terms  of  it  would  have 
been  more  easily  fixed  upon.  But  Congress, 
like  an  individual,  seldom  does  anything  so 
long  as  it  can  be  postponed,  and  so  the  propo- 
sition was  thrown  into  the  future  to  take  its 
chances.  Now  the  necessity  is  upon  us.  We 
must  act  or  refuse  to  act  in  the  midst  of  an 
unusual  activity  of  financial  discussion,  both  in 
Congress  and  in  the  country,  and  with  the 
feeling  strong  upon  us  that  the  difference  is 
very  great  between  action  and  non-  action. 

It  is  not  to  be  disguised  that  public  atten- 
tion has  been  largely  turned  toward  this  mat- 
ter. But  I  would  not  have  the  House  act  from 
popular  clamor.  I  am  quite  sure  it  will  not. 
There  is  courage  enough  in  this  House  to  resist 
popular  influences  when  they  are  wrong.  And  I 


I  know  the  members  of  this  body  will  not  refrain 
from  acting  because  they  may  subject  themselves 
to  the  charge  of  seeking  the  popular  favor. 

I  speak  of  the  popular  feeling  because  that 
is  a  strong  reason  why  the  subject  should  be 
examined.  That  fact  brings  the  matter  prop- 
erly before  Congress  for  discussion.  Let  that 
consideration  be  given  to  the  matter  now  which 
its  importance  demands.  We  certainly  cannot 
go  wrong  in  giving  time  to  the  investigation  of 
a  question  which  more  than  any  other  pertain- 
ing to  taxation  or  finance  occupies  the  public 
thought. 

Nor  am  I  to  be  deterred  from  acting  upon 
the  subject  because  a  large  party  has  already 
in  many  sections — perhaps  everywhere  in  the 
country — attempted  to  create  a  partisan  advan- 
tage for  themselves  out  of  the  non- taxability 
of  these  bonds. 

As  a  party,  the  Republican  party  has  taken 
rio  position  upon  this  subject.  Individual  mem- 
bers of  it  differ,  and  as  an  organization  having 
the  control  of  legislation  we  must  either  acqui- 
esce in  propositions  for  taxation  or  give  the 
reasons  for  not  doing  it.  We  cannot  answer 
the  other  side  of  the  House  with  a  sneer  at  its 
loyalty.  The  shake  of  Lord  Burleigh's  head 
was  said  to  have  contained  a  great  deal  of  wis- 
dom in  his  day,  but  that  day  has  passed.  If  we 
attempt  to  slough  off  those  who  propose  this 
species  of  taxation  as  demagogues,  as  persons 
who  would  set  class  against  class,  or  repudiate 
debts  for  the  sake  of  votes,  we  shall  make  a 
mistake,  and  this  is  a  time  when  we  can  hardly 
afford  many  blunders  in  financial  legislation. 

If,  as  I  believe  after  a  patient  examination 
of  the  subject,  the  soundest  maxims  of  political 


economy  and  the  highest  practical  wisdom 
demand  action  on  this  subject  at  our  hands,  we 
can  hardly  afford  to  refrain  because  the  other 
side  of  the  House  votes  with  us.  It  would  be 
but  a  sorry  excuse  to  give  constituents.  Those 
of  us  who  voted  against  impeachment  had 
the  unhappiness  of  having  such  associates, 
although  we  had  the  high  satisfaction  of  know- 
ing that  a  majority  of  our  political  friends  went 
with  us. 

The  public  debt  should  not  be  a  matter  of 
partisan  discussion.  It  arose  out  of  the  dire 
necessities  of  the  country.  It  is  a  portion  of 
the  money  price  paid  for  our  nationality.  But 
it  will  be  thrown  into  the  canvass,  and  I  care 
not  if  it  is.  I  shall  not  mourn  if  it  prove  to  be 
one  of  the  immortal  creations  of  the  war.  Let 
it  remain  as  a  huge,  unsightly  monument  of  the 
decay  and  corruption  of  a  great  party  to  whom 
for  long  years  the  people  generously  intrusted 
the  management  of  their  national  concerns, 
and  who,  when  rebuked  for  their  many  crimes 
against  the  public  good  and  ejected  from  place, 
wickedly  attempted  to  destroy  the  Government 
they  could  no  longer  control.  It  would  be  a 
beaconTof  warning  to  the  voters  of  the  Republic 
not  to  intrust  its  destinies  again  to  the  hands 
of  those  who  have  proved  so  unworthy,  and  so 
run  the  risk  of  their  plunging  the  country  into 
another  war  and  causing  the  creation  of  an- 
other debt. 

But  I  am  not  disposed  to  view  the  matter 
altogether  as  a  partisan.  We  have  the  debt 
upon  us.  We  must  carry  it  along  in  good  faith, 
as  we  agreed  to  do,  and  in  due  time  we  must 
pay  it  or  renew  it,  feeling  well  assured  that  as 
the  years  go  by  the  rapidly  increasing  property 
of  the  country  will  form  an  ampler  base  upon 
which  to  rest  its  burdens.  The  hundred  mil- 
lion inhabitants  that  are  by  and  by  to  con- 
stitute the  people  of  the  Republic,  with  the 
incalculable  wealth  that  will  be  theirs,  will 
bear  this  debt  too  easily  to  make  it  a  subject 
of  complaint.  Our  business  is  to  "tide  it 
over  ;"  and  when  the  country  has  once  settled 
upon  the  proper  methods  of  carrying  it  we  shall 
find  our  prosperity  too  elastic  to  be  cramped  by 
its  weight. 

This  debt  now  constitutes  a  great  property — 
a  property  recognized  by  our  courts,  subject 
to  our  laws  of  conveyance  and  descent,  and 
protected  by  the  national  and  State  authorities. 
It  is  subject  only  to  the  laws  of  Congress,  and 


Congress  itself  is  bound  by  the  terms  of  the 
acts  which  brought  it  into  existence. 

The  immense  magnitude  of  this  property 
has  become  so  familiar  to  us  that  we  fail  to 
appreciate  it  except  by  comparison.  It  ex- 
ceeds in  value  the  whole  property  of  New 
England,  New  Jersey,  and  Delaware  in  I860, 
and  is  very  considerably  more  than  double  the 
census  valuation  of  the  eight  northern  States 
lying  west  of  the  Mississippi.  The  whole 
property  of  the  country  in  1860,  except  slaves, 
was  $14,000,000,000,  and  allowing  an  increase 
of  fifty  per  cent.,  the  great  property  repre- 
sented by  this  debt  is  worth  one  eighth  of  the 
whole  of  it. 

By  the  terms  of  its  creation  this  property  is 
"exempt  from  taxation  by  or  under  State 
authority."  All  the  acts  creating  it  in  various 
but  explicit  terms  exempt  it  from  any  but  con- 
gressional taxation ;  and  had  it  not  been  so 
stated  in  the  loan  bills  the  decisions  of  the 
Supreme  Court  would  have  brought  about  the 
same  result. 

So  far  as  I  am  aware  no  question  has  arisen 
as  to  the  authority  of  Congress  to  tax  this 
property  as  it  pleases  and  to  the  extent  it 
chooses  to  tax  it.  The  only  restraint  over  the 
power  of  Congress  in  this  respect  is  that  which 
controls  all  legislation — whether  financial  or 
other — and  that  is,  that  Congress  shall  exercise 
its  authority  for  the  public  good.  We  are  not 
embarrassed  either  by  lack  of  constitutional 
authority  or  by  expressed  or  implied  faith 
toward  those  who  bought  this  property  in 
accordance  with  our  legislation.  The  agree- 
ment not  to  allow  States  or  towns  to  tax  it — so 
far  as  anything  either  way  be  implied  from  it — 
is  rather  in  the  nature  of  notice  to  the  pur- 
chasers and  holders  that  Congress  did  not  in- 
tend to  relinquish  its  own  rights  in  the  premises, 
but  should  exercise  them  if  it  deemed  proper. 

And  without  objection  on  the  part  of  any- 
body Congress  has  exercised  its  rights  in  this 
respect.  By  the  act  of  July  1,  1862,  an  income 
tax  of  three  per  cent,  was  authorized  upon  the 
gains  of  all  property  except  bonds,  and  upon 
incomes  from  bonds  the  tax  was  one  and  a 
half  per  cent.  By  the  acts  of  June  30,  1864, 
and  March  3,  1865,  incomes  from  bonds  were 
placed  upon  the  same  footing  as -from  other 
property,  and  that  is  the  present  law. 

These  acts  asserted  the  right.  But  the  tax 
in  proportion  to  the  other  taxation  of  the  coun- 


try  was  very  slight.  In  1862  it  was  but  nine 
cents  on  the  hundred  dollars,  and  now  but 
thirty  cents  on  the  same  sum. 

But  to  this  there  were  exceptions.  The  per- 
son who  has  $16,000  of  property  all  in  Gov- 
ernment bonds  escapes  national  taxation  alto- 
gether, because  incomes  to  the  amount  of 
$1,000  are  exempt  from  taxation ;  so  he 
shirks  the  burdens  both  of  the  State  and 
national  Governments. 

What  the  percentage  of  taxation  may  be 
upon  the  actual  value  of  the  property  of  the 
country  it  is  quite  impossible  to  say.  We  all 
know  the  unreliability  of  the  census  returns 
when  the  result  was  a  mere  matter  of  opinion. 
In  many  instances  the  census  agents  blundered 
when  it  was  simply  a  question  of  numbers.  Of 
course  when  they  had  to  exercise  their  judg- 
ment as  to  so  difficult  a  matter  as  the  value  of 
property  they  are  still  less  to  be  depended  upon. 

But  from  the  data  that  every  one  has — that 
of  his  own  neighborhood  and  State — it  is  but 
a  moderate  estimate  to  say  that  the  average  tax 
upon  every  species  of  property  in  the  country 
at  its  full  market  value  for  State  and  municipal 
purposes  is  one  per  cent. 

For  national  purposes  we  are  now  raising 
about  four  hundred  millions  a  year,  and  it  is 
estimated  that  the  laws  now  in  force  will  give 
that  sum  in  future.  Of  course  this  is  unequally 
distributed — some  of  it  specific,  but  chiefly  in- 
direct— but  in  the  aggregate,  as  a  charge  against 
the  property  of  the  country,  it  amounts  to  two 
per  cent,  on  a  valuation  of  $20,000,000,000. 

So  that  for  State,  national,  and  municipal 
purposes  we  are  paying  annually  three  per 
cent,  on  a  fair  valuation  of  the  property  of 
the  whole  country. 

The  immediate  question  before  us  is  whether 
under  these  circumstances  this  great  property 
of  bonds — paying  no  local  taxes  and  but  three 
tenths  of  one  per  cent,  of  national  taxation — 
shall  be  made  to  contribute  more  liberally  to- 
ward defraying  the  public  charges?  I  say  it 
contributes  three  tenths  of  one  per  cent,  to- 
ward the  national  taxation.  But  that  is  only 
in  certain  cases.  The  exemption  that  I  have 
already  stated  is  so  large  that  in  the  majority 
of  instances  no  tax  is  collected.  I  have  in- 
quired at  the  Bureau  of  Internal  Revenue  how 
much  the  present  tax  on  bonds  yields,  but  they 
are  unable  to  inform  me.  It  is  not  thought 
there,  however,  that  any  considerable  sum  is 


drawn  from  them,  and  that  practically  the 
bonds  escape  national  as  well  as  State  taxation 
by  means  of  the  exemption. 

I  am  at  a  loss,  sir,  to  know  how,  consistently 
with  proper  theories  of  taxation,  we  shall  con- 
tinue the  present  discrimination  in  favor  of 
this  great  property.  Let  me  call  the  attention 
of  the  House  to  the  present  operation  of  the 
revenue  laws.  The  director  of  the  Bureau  of 
Statistics  has  kindly  furnished  them  to  me. 

We  tax  tea  the  sum  of  $8,723,956  31  ;  cof- 
fee, $7,901,847  99 ;  molasses,  $3,037,452  10 ; 
sugar,  $27,774,096  80.  This  is  for  the  fiscal 
year  ending  June  30,  1866.  For  the  last  year 
they  are  about  the  same. 

This  is  by  means  of  the  tariff.  But  they  are 
almost  purely  revenue  taxations.  The  result 
to  the  consumer  is  the  same  as  if  each  man 
who  purchased  was  charged  by  the  internal 
revenue  officer  a  certain  price  for  his  tea,  cof- 
fee, molasses,  sugar,  and  an  additional  sum 
in  proportion  to  the  quantities  consumed. 
There  is  no  question  of  incidental  benefit  from 
protection  in  it — it  is  bald,  naked  assessment. 

By  means  of  the  internal  revenue  officers 
we  tax  railroads  $4,000,000  annually  and  allow 
them  to  assess  it  upon  the  public.  This  sum 
is  necessarily  paid  by  all  classes,  and  perhaps 
comes  as  near  a  per  capita  tax  upon  people  of 
moderate  means  as  any  that  can  be  laid. 

Revenue  stamps  yield  $16,000,000,  and  the 
tax  is  an  assessment  in  great  part  upon  the 
business  men  of  the  country. 

Wholesale  and  retail  merchants  pay  nearly 
six  million  dollars  annually  for  licenses  to 
trade,  and  get  it  back  from  their  customers  if 
they  can. 

Besides  these  taxes,  affecting  particular 
classes  of  the  community,  we  have  the  great 
manufacturing  tax,  which  draws  according  to 
consumption  from  every  man,  woman,  and 
child  in  the  country. 

I  do  not  speak  of  these  taxes  complainingly — 
the  internal  revenue  system  of  taxation  was  a 
wise  one  and  has  answered  the  purpose  of  its 
creation  most  admirably — but  I  usev  them  for 
the  purpose  of  comparison. 

And  I  may  here  as  well  as  elsewhere  disavow 
all  feelings  against  bond-holders.  The  gentle- 
man from  Illinois  [Mr.  Ross]  the  other  day 
talked  about  "rich  bond-holders."  It  is  an 
unfair  use  of  terms.  It  is  an  attempt  to  excite 
prejudice  in  the  country  against  persons  who 


deserve  other  treatment  at  the  hands  of  the 
members  of  this  House.  The  bond-holders  are 
of  all  classes.  Rich  people  hold  the  larger 
quantity  of  bonds  because  they  hold  the  larger 
amount  of  all  the  most  desirable  kinds  of  prop- 
erty. But  large  sums  are  held  by  men  and 
women  of  small  property.  Orphans  and  widows 
are  largely  interested  in  what  they  have  been 
taught  to  believe  the  best  investment  in  this 
country. 

And  I  protest  that  it  is  no  feeling  against 
bond-holders  that  induces  me  to  propose  this 
taxation  any  more  than  it  was  a  feeling  against 
tea-drinkers  that  caused  me  to  vote  twenty-five 
cents  per  pound  upon  tea. 

The  instances  of  taxation  that  I  have  given, 
as  well  as  many  others  that  will  occur  to  any- 
body who  thinks  upon  the  subject,  sustain  the 
position  that  this  property  in  bonds  can  as  well 
bear  taxation  as  any  that  I  have  enumerated, 
and  that  if  it  be  proper  to  assess  the  larger  tax- 
ation upon  those  best  able  to  bear  it — if  it  be 
good  political  economy  to  collect  from  accu- 
mulations rather  than  burden  processes  for  crea- 
tion of  wealth — if  it  be  fit  to  tax  luxuries  rather 
than  necessaries,  then  should  this  great  prop- 
erty in  bonds  contribute  as  well  as  tea  and 
coffee,  railroad  fares,  or  revenue  stamps. 

We  are  not  destitute  of  authorities  for  this 
taxation. 

The  first  is  the  Revenue  Commission  author- 
ized by  the  Thirty-Eighth  Congress.  One  of 
the  members  of  that  commission,  Mr.  Hays, 
was  specially  charged  with  this  subject.  He 
took  testimony  upon  it.  The  statements  of  Mr. 
Astor  and  some  fifteen  or  twenty  leading  bank- 
ers and  brokers  and  financial  men  of  New  York 
is  given  in  his  report,  and  it  is  favorable  to  tax- 
ation. After  a  full  examination  of  the  whole 
matter  Mr.  Hays  recommended  a  tax  of  one 
per  cent. 

But  the  more  important  authority  is  the  Sec- 
retary of  the  Treasury,  who  in  his  last  report 
recommends  a  tax  of  one  per  cent.  He  is 
peculiarly  charged  by  virtue  of  his  office  with 
the  guardianship  of  the  financial  honor  of  the 
country,  and  has  special  facilities  for  knowing 
the  best  subjects  of  taxation. 

He  gives  the  discusion  in  a  former  report, 
(1865,)  and  says: 

"The  views  of  the  Secretary  thus  expressed  have 
undergone  no  change,  but  the  exemption  from  taxa- 
tion of  any  kind  of  property  by  which  special  privi- 
leges are,  or  seem  to  be,  granted  to  any  class  of  citi- 


zens is  odious  to  the  heavily  burdened  masses  in  all 
classes,  and  is  especially  so  in  a  republic  like  ours. 
Local  taxes  in  all  the  States  are  heavy,  and  no  mat- 
ter what  the  law  may  say  upon  the  subject,  no  mat- 
ter what  the  contract  may  have  been  under  which 
they  were  negotiated,  there  is  a  general  sentiment 
among  tax-payers  that  the  exemption  of  Govern- 
ment bonds  from  local  taxation  is  not  exactly  right, 
and  that  it  ought  to  be  in  some  way  avoided  in 
future  issues.  The  Secretary  has  no  hesitation  in 
admitting  that  he  is  in  sympathy  with  this  senti- 
ment." 

And  the  Secretary  proposes  to  issue  new 
six  per  cent,  bonds  in  lieu  of  those  now  out- 
standing, and  to  tax  them  one  per  cent.  He 
proposes  to  convert  the  outstanding  bonds 
into  these  new  ones,  and  entertains  no  doubt 
of  his  ability  to  do  it.  How  this  is  to  be  done 
he  does  not  say.  He  gives  the  bond-holders 
a  five  per  cent,  bond  instead  of  the  one  they 
now  hold.  Why  should  they  take  it  ?  Will 
he  ask  for  authority  to  stop  payment  of  inter- 
est until  the  exchange  is  made ;  or  will  he 
alarm  the  public  creditor  by  fears  of  popular 
discontent  and  wrest  from  his  timidity  the 
more  valuable  property  ?  And,  in  order  to 
satisfy  the  States  that  his  operations  with  the 
bond-holders  are  legitimate,  he  offers  to  pay 
them  the  amount  he  takes  out  of  the  bond- 
holders. Apparently  he  would  scare  one  and 
bribe  the  other. 

And  it  is  an  attractive  list  the  Secretary 
presents  to  Congress  for  its  consideration. 
Each  member  can  see  his  own  State  with  the 
sum  in  gold  set  opposite  her  name.  My  own 
State  leads  the  list  with  the  respectable  sum 
of  $385,609  76  set  opposite,  and  Oregon  winds 
up  the  golden  column  with  $96,000  76.  The 
thirty-seven  States  are  all  there  I 

Why  the  Territories  are  excluded  I  do  not 
perceive.  They  are  obliged  to  pay  their  share 
of  the  general  taxation.  Why  should  not  they 
have  the  proper  dividend?  Why  should  Brig- 
ham  Young  and  his  wives  and  children  be 
excluded  in  the  golden  distribution  ?  Aliaska, 
too,  will  need  her  share  as  much  as  any  por- 
tion of  the  Republic.  When  she  is  fairly  in- 
corporated and  the  Secretary's  golden  shower 
begun,  the  gentleman  from  Wisconsin,  [Mr. 
WASHBUBN.]  who  has  so  ably  taken  the  affairs 
of  that  forlorn  Territory  in  hand,  should  see 
that  her  interests  are  not  overlooked. 

But  if  the  Secretary  has  shunned  the  Terri- 
tories he  has  not  omitted  the  rebel  States. 
He  proposes  to  pay  Virginia  $730,662  50  an- 
nually, and  South  Carolina  $431,905  13,  and 
the  other  rebel  States  in  proportion  to  popu- 


lation  "without  regard  to  race  or  color!" 
and  all  in  gold ! 

Of  course  the  Secretary  does  not  expect  us 
to  believe  that  this  generous  sum  of  $20,000,000 
annually  will  come  out  of  the  bond-holders.  No 
such  thing.  It  comes  out  of  the  tax-payers  of 
the  country.  It  is  simply  taxing  the  country 
$20,000,000  in  gold  annually  for  the  purpose 
of  distributing  it  among  the  States  in  propor- 
tion to  population. 

How  equal  this  would  be  can  be  seen  from 
the  fact  that  the  rebel  States  pay  but  small 
amounts  into  the  Treasury,  burdened  with  full 
charges  of  collection,  and  yet  it  is  proposed  by 
the  Secretary  to  distribute  among  them  the 
sum  of  $4,812,281  annually  in  gold. 

Before  the  recent  extension  of  the  postal  ser- 
vice into  those  States  the  Department  was  nearly 
self-sustaining,  but  now  I  notice  by  the  report 
of  the  Postmaster  General  there  is  a  deficit  of 
about  five  millions.  I  do  not  object  to  paying 
this  sum,  now  that  the  mails  are  free  to  carry 
whatever  of  information  may  be  intrusted  to 
them.  But  to  add  to  this  an  equal  sum  for  no 
other  reason,  apparently,  than  that  the  Secre- 
tary has  a  strong  feeling  against  the  injustice 
of  not  taxing  the  national  debt,  is  a  kind  of 
financial  wisdom  that  I  do  not  appreciate. 

Those  States  last  year  did  contribute  about 
twenty  million  dollars  for  the  cotton  tax.  This 
the  House  has  hastened  to  relieve  them  of. 
Leaving  all  other  oppressed  industrial  interests 
to  take  care  of  themselves  as  well  as  they  could, 
the  House  has  made  a  specialty  of  the  cotton 
tax.  I  could  not  concur  in  the  vote.  There 
were,  in  my  estimation,  other  interests  equally 
worthy  of  immediate  attention  by  the  Com- 
mittee of  Ways  and  Means.  Not  to  mention 
others,  the  great  navigation  interests  of  the 
country,  confessedly  suffering  intensely  from 
adverse  legislation,  need  looking  after.  The 
Secretary  of  the  Treasury  has  twice  called  the 
attention  of  Congress  to  them.  I  had  the  honor 
of  submitting  propositions  for  their  relief  at  the 
first  session  of  the  Thirty-Ninth  Congress  and 
urged  them  during  the  pendency  of  the  tariff 
bill,  where  they  properly  belong.  My  colleagues 
have  renewed  those  propositions  by  resolutions 
of  inquiry  at  the  present  session.  But  I  had 
no  idea  of  asking  special  legislation  for  this 
suffering  interest,  and  it  would  have  availed 
nothing  if  I  had.  I  shall  be  well  content  if  the 
House,  when  the  tariff  and  internal  revenues 


come  before  them  shall  apply  the  proper  rem- 
edies to  existing  troubles.  It  is  certainly  of 
national  interest  that  our  ships  shall  not  be 
driven  from  the  ocean  and  our  whole  trade 
abroad,  if  not  coastwise,  be  placed  in  the  hands 
of  foreigners.  And  unless  Congress  shall  act 
speedily  we  shall  be  so  far  second  to  Great 
Britain  on  the  ocean  as  to  find  it  impossible  in 
our  generation  to  come  into  active  competition 
with  her.  Certainly  it  was  unwonted  magna- 
nimity iniCongress  to  give  local  interest  the 
precedence  over  those  of  national  importance, 
when  a  remedy  for  the  evils  that  afflict  both 
should  be  applied  before  it  is  necessary  to 
prepare  for  the  next  crop  either  of  ships  or 
cotton. 

I  have  had  the  curiosity  to  obtain  from  the 
Bureau  of  Internal  Revenue  a  statement  of 
amounts  paid  by  the  rebel  States,  and  I  give 
some  of  them  for  the  last  two  years,  together 
with  a  statement  of  the  amount  the  Secretary 
would  repay  them  if  his  proposition  obtains  : 

Secretary 
proposes 

Receipts  to  pay 
in  1867.  annually 
$58.343  00  690,290  60 
118,518  37  471,792  28 
431,556  28  529,772  40 
110,814  96  267.259  98 

It  will  be  recollected  that  the  receipts  from 
internal  revenue  in  1866  were  $310,906,984  17, 
and  in  1867  they  were  $265,920,474  65.  And 
it  should  not  be  forgotten  that  the  receipts  were 
in  currency  while  the  Secretary  proposes  to  pay 
the  States  in  gold. 

It  is  suggested  in  some  of  the  papers  that 
the  Secretary's  plan  would  win  the  good- will 
of  the  rebel  States  and  attach  them  to  the 
Union.  I  should  think  it  would.  One  of  the 
Secretaries  proposes  that  we  buy  the  continent 
for  the  purpose  of  rulingthe  world,  and  another 
that  we  pay  an  annuity  to  the  rebel  States  to 
keep  them  good-natured.  But  how  about  the 
tax-payers?  Is  there  no  end  of  their  forbear- 
ance? 

If  the  Secretary  of  the  Treasury  had  proposed 
to  assume  the  war  debts  of  the  loyal  States  and 
then  applied  the  one  per  cent,  tax  to  discharge 
the  liabilities  assumed  for  that  purpose,  I  should 
have  been  more  willing  to  accept  his  proposi- 
tion. As  he  presents  it  the  Secretary's  plan 
should  not  be  adopted,  and  if  it  could  be  put  in 
force  it  is  plain  that  it  would  be  speedily  repealed . 
I  voted  to  make  a  liberal  allowance  to  the  Freed- 
men's  Bureau  for  the  purpose  of  organizing 


Receipts  from 
all  sources 
except  cot- 
ton in  1866. 

Florida $726  98 

Mississippi 24,631  76 

Texas 176,026  48 

^Arkansas 53,069  53 


6 


and  protecting  labor,  and  in  that  way  produce 
the  accustomed  crop  of  cotton.  In  my  judg- 
ment it  was  a  wise  appropriation.  But  having 
accomplished  that  purpose,  and  the  House  hav- 
ing voted  to  abolish  the  cotton  tax,  it  is  clear  the 
bureau  must  go  with  it,  and  so  should  all  other 
special  appropriations. 

I  have  heretofore  looked  to  an  exchange  of 
bonds  as  the  ready  way  to  accomplish  the  pur- 
pose of  making  the  property  in  them  subject  to 
the  same  burdens  as  other  less  favored  property ; 
and  for  that,  among  other  reasons,  I  have  hoped 
for  a  speedy  resumption  of  specie  payments, 
and  constantly  voted  to  bring  it  about.  It  is 
plain  to  my  mind  that  we  have  the  ability 
to  put  the  finances  of  the  Government,  where 
they  should  be,  on  a  specie  basis  almost  when- 
ever we  will.  The  short  loans  will  all  very  soon 
be  provided  for,  and  nothing  be  left  for  the 
Secretary  but  to  arrange  for  interest  and  cur- 
rent expenses.  These  the  accruing  income 
will  take  care  of,  so  that  he  will  have  merely 
to  keep  his  greenbacks  afloat  by  the  specie  at 
his  command.  It  is  the  problem  the  banks 
have  dealt  with  so  many  years,  of  keeping  out 
three  or  four  times  as  much  paper  as  they  had 
specie,  and  have  generally  found  no  difficulty  in 
doing  it. 

But  whether  this  view  be  right  or  wrong,  I 
think  I  cannot  err  in  believing  that  the  House 
does  not  desire  to  go  to  specie  at  once.  The 
decisive  vote  the  other  day  withdrawing  the 
present  authority  of  the  Secretary  to  destroy 
greenbacks  indicates  this  purpose,  and  I  shall 
be  very  happily  disappointed  if  the  House 
stops  where  it  is  and  does  not  authorize  and 
direct  a  new  issue  of  paper.  The  road  toward 
specie  is  getting  to  be  a  weary  one.  The  House 
has  apparently  indicated  its  purpose  to  stop 
traveling  it  for  the  present.  It  will  do  well  if 
it  does  not  actually  slide  back  and  trust  to  luck 
to  retrace  its  up-hill  steps  at  some  future  day. 

We  shall  not  resume  specie  payments  at 
present,  and  we  shall  not,  therefore,  pay  off  that 
portion  of  the  debt  now  under  our  control  in 
gold. 

It  is  proposed  to  pay  it  in  paper.  That 
would  be  well  enough  if  we  had  the  paper.  I 
should  have  no  hesitation  in  doing  BO  if  we 
could.  I  should  have  no  fear  of  shocking  the 
sensibilities  of  the  holders  of  our  bonds  or 
staining  our  financial  honor  if,  in  the  absence 
of  any  bargain  to  the  contrary,  we  paid  cred- 


itors in  exactly  the  currency  they  loaned  to 
the  Government. 

I  do  not  propose  to  discuss  a  subject  which 
has  already  been  treated  so  ably  and  elabo- 
rately by  gentlemen  in  both  Houses  of  Con- 
gress, but  I  desire  to  remind  the  House  that 
all  of  the  greenback  legal-tender  currency  was 
authorized  by  Congress  before  any  consider- 
able part  of  either  issue  of  the  five-twenty  loan 
was  taken. 

There  were  three  acts,  and  but  three,  au- 
thorizing the  greenback  legal-tender  currency. 
Each  authorized  the  issue  of  $150,000,000. 
The  dates  were  February  25,  1862,  July  11, 
1862,  and  March  3,  1863.  At  the  time  of  the 
passage  of  the  last  of  these  acts  but  $25,000,- 
000  of  the  five-twenty  loan  authorized  the  year 
before  had  been  taken. 

So  that  this  money  which  gentlemen  now 
call  "depreciated  currency"  had  long  been 
the  "lawful  money"  of  the  statutes  before  the 
public  took  these  bonds.  It  had  become  the 
favorite  currency  of  commerce.  All  of  our 
States  except  Massachusetts  and  California 
paid  the  interest  on  debts  contracted  on  a  gold 
basis  in  this  paper.  My  own  State,  if  I  mis- 
take not,  paid  principal  as  well  as  interest  of 
public  debt  in  greenbacks.  Corporations  every- 
where and  individuals  of  the  highest  finan- 
cial honor  did  not  hesitate  to  pay  debts  long 
antecedently  contracted  in  Government  legal 
tenders  then  recognized  by  courts  and  in  com- 
mon use  everywhere. 

Are  all  these  subject  to  the  reproach  of  being 
scoundrels  and  repudiators  ? 

Of  course,  if  there  were  a  bargain  or  author- 
itative agreement  to  pay  these  bonds  in  coin 
the  circumstances  I  have  mentioned  would  not 
be  of  moment.  But  when  the  bond  and  the 
act  authorizing  it  are  both  silent  upon  the 
subject,  neither  specifying  in  what  the  principal 
of  the  bond  shall  be  paid,  although  stipulating 
that  the  interest  shall  be  paid  in  coin,  then  I 
say  Congress  keeps  good  faith  with  the  public 
creditor  when  it  pays  him  back  the  money  it 
received  from  him — money  which  then  consti- 
tuted almost  the  entire  circulating  medium  of 
the  country. 

And  if  these  bonds  had  been  payable  abso- 
lutely in  five  years,  and  the  public  creditor  was 
now  asking  the  Secretary  for  the  payment  of 
the  principal,  does  anybody  suppose  he  could 
not  take  the  same  ground  with  reference  to 


these  bonds  that  previous  Secretaries  did  with 
regard  to  the  short  bonds  of  1861  ?  The  bonds 
of  1861,  payable  in  three  years,  although  issued 
on  a  gold  basis,  were  paid  in  1864  in  green- 
backs or  new  bonds.  No  reason  was  given  for 
this  except  that  they  did  not  belong  to  the 
permanent  loan.  A  poor  reason  is  said  to  be 
better  than  none. 

But  whether  this  view  of  the  matter  be  cor- 
rect or  not  is  of  small  importance.  We  cannot 
pay  the  principal  of  these  bonds  either  in  specie 
or  paper.  We  have  no  money  to  do  it,  and  we 
ought  not  to  tax  our  people  further  in  order  to 
obtain  money  for  this  purpose.  We  cannot 
sell  new  bonds  and  obtain  paper  with  which  to 
do  it.  We  should  find  no  market  for  such 
bonds,  and  we  ought  not  to  issue  one  new  dol- 
lar in  paper  for  that  or  any  other  purpose, 
except  it  may  be  to  substitute  greenbacks  for 
national  bank  currency. 

These  facts  leave  no  other  remedy  for  the 
gross  wrong  which  the  Secretary  describes, 
no  other  way  of  satisfying  that  sense  of  right 
which  he  says  he  is  "in  sympathy  with,"  than 
to  tax  the  property  in  bonds,  as  I  propose. 

I  propose  to  tax  the  bonds  one  per  cent,  of 
their  value  annually,  the  tax  to  be  assessed  and 
collected  by  the  officers  of  the  internal  rev- 
enue department. 

It  is  true  that  this  will  not  reach  foreign 
holders.  I  do  not  know  why  it  should.  The 
bond  is  personal  property.  Unlike  a  certificate 
of  stock  in  a  bank,  it  does  not  represent  prop- 
erty elsewhere,  but  it  is  property  in  itself.  Like 
all  other  personal  property,  if  owned  in  this 
country  let  it  be  taxed  here ;  if  owned  abroad 
let  it  be  taxed  there.  Our  ships  are  taxed  here 
so  long  as  they  have  American  owners.  When 
they  are  sold  abroad  and  take  a  foreign  regis- 
ter we  cease  to  tax  them.  How  much  this 
would  deduct  it  is  difficult  to  say.  Probably 
one  eighth  of  the  bonds  are  held  abroad.  If 
we  get  seven  eighths  of  the  tax  we  should  have 
•we  shall  do  better  from  this  than  from  the 
majority  of  taxations. 

This  is  the  present  method  of  taxation  of 
this  property  when  the  income  tax  is  assessed. 
The  change  I  propose  is  one  of  amounts  and 
not  of  principle. 

If  it  be  said  that  this  property  will  escape 
taxation,  and  that  if  it  be  taxed  at  all  it  should 
be  by  retaining  one  per  cent,  of  the  interest 
we  agreed  to  pay,  my  reply  is  that  we  agreed 


to  pay  the  interest  specified  in  the  bonds,  and 
a  rebate  of  interest  is,  so  far,  a  repudiation  of 
the  contract.  If  we  agreed  to  pay  six  per  cent, 
let  us  pay  it.  Let  us  not  pay  five,  and  tell  the 
creditor  we  have  taken  the  other  one  per  cent, 
and  put  it  into  the  national  Treasury.  That  is 
not  keeping  the  public  faith.  We  may  as  well 
deduct  from  the  principal  as  from  the  interest. 

It  is  true  that  the  whole  of  this  tax  will  not 
be  collected.  If  that  be  a  reason  why  a  tax 
should  not  be  laid  then  we  should  strike  off 
the  larger  share  of  tax  on  articles  from  our 
list.  The  income  tax  is  very  largely  avoided, 
and  yet  we  collect  some  fifty  or  sixty  millions 
annually  from  it.  I  do  not  believe  the  holders 
of  our  bonds  are  cheats  and  knaves.  They  are 
at  least  an  average  of  American  tax-payers. 
We  shall  get  as  good  a  proportion  of  tax  from 
this  source  as  from  any  of  the  numerous  arti- 
cles on  the  list.  No  one  believes  that  whisky 
cheats  will  be  duplicated  by  bond-holders. 

The  mode  I  propose  is  precisely  that  adopted 
by  the  States  in  the  taxation  of  State  bonds. 
They  are  taxed  in  the  same  manner  as  other 
property.  No  one  proposes  to  exempt  them 
from  taxation,  and  no  one  would  have  the 
State  deduct  from  the  stipulated  interest  by 
way  of  taxation.  The  immense  values  of 
property  in  town,  city,  county,  and  State 
bonds  are  all  taxed  just  as  I  propose  to  tax  the 
national  bonds,  except  that  as  they  are  issued 
under  State  authority  they  are  taxed  by  the 
State  authority.  Those  issued  under  national 
authority  are  to  be  taxed  by  national  officers. 

If  the  objection  be  made  that  the  effect  of 
this  tax  will  be  to  drive  the  bonds  abroad  I 
reply  that  that  will  not  be  the  worst  of  evils. 
They  will  not  be  sold  unless  the  holders  receive 
fair  equivalents,  and  the  money  received  from 
these  bonds  will  go  into  business  channels  and 
aid  in  the  development  of  the  great  resources 
of  the  country.  There  is  little  danger  of  a 
plethora  of  money  capital  in  the  country  for 
some  time  to  come.  Ex- Secretary  Walker 
thinks  a  foreign  loan  the  grand  panacea  for 
our  financial  evils,  and  the  present  Secretary 
last  Congress  asked  for  authority  to  make 
bonds  payable  abroad  in  order  to  sell  them  the 
more  readily  in  the  European  markets. 

It  may  be  that  holders  of  bonds  rather  than 
pay  this  tax  to  the  General  Government  will 
prefer  to  pay  a  local  tax  in  the  place  of  their 
residence.  To  meet  this  case  I  would  author- 


8 


ize  the  Secretary  to  issue  bonds  not  subject  to 
national  taxation  and  subject  to  State  and 
municipal  taxation,  and  direct  him  to  ex- 
change at  the  pleasure  of  the  holder.  It  is 
not  improbable  that  in  this  way  by  the  consent 
of  bond-holders  the  present  discontent  on  the 
score  of  non-taxation  may  be  relieved.  Perhaps 
it  would  be  well  to  limit  this  amount  to  one 
per  cent.  When  it  is  considered  that  this  prop- 
erty is  to  be  taxed  at  full  value,  and  that  for 
taxable  purposes  other  property  is  usually 
valued  much  less  than  the  sum  for  which  it 
would  be  marketable,  a  limit  of  one  per  cent, 
would  be  advisable.  It  would  prevent  excessive 
taxation  on  the  part  of  unfriendly  local  officers, 
and  would  at  the  same  time  give  a  fair  average 
of  the  local  taxation  of  the  country. 

I  know  of  no  other  objection  to  the  proposed 
measure  except  that  it  will  have  a  bad  effect  on 
the  national  credit  and  depreciate  the  national 
bonds.  But  no  one  has  a  right  to  say  this.  The 
opinions  of  the  largest  bond-holders  in  this 
country,  as  given  in  Mr.  Hays' s  report,  do  not 
sustain  such  an  idea.  And.  what  is  of  more 
importance,  the  facts  in  relation  to  State  bonds 
are  not  at  all  in  accordance  with  this  view  of 
the  subject.  Except  Massachusetts  and  Cali- 
fornia, they  are  all  currency  bonds,  and  yet  State 
bonds  subject  to  all  sorts  of  taxes  are  quoted 
and  sold  in  all  the  principal  markets  as  high  as 
national  bonds,  making  the  proper  allowance 
for  the  difference  of  interest.  Very  frequently 
they  go  higher.  The  fact  that  they  are  subject 
to  taxation  makes  no  apparent  difference  in 
the  price. 


And  it  is  a  consideration  worthy  of  attention 
that  some  such  measure  as  this,  satisfactory  to 
Congress  and  the  tax-payers  of  the  country, 
will  quiet  discussion  and  stop  agitation  on  the 
subject.  That  will  be  a  great  gain,  and  the 
result  may  well  be  looked  for  that  instead  of 
depreciation  the  national  bonds  will  rise  in 
value  as  a  consequence. 

I  have  no  idea  that  the  measure  I  propose 
will  antagonize  any  plan  of  funding  that  may 
be  suggested  at  low  rates  of  interest.  I  presume 
no  one  supposes  we  shall  be  obliged  to  carry 
the  debt  long  at  six  per  cent.  It  is  not  in  accord- 
ance with  the  experience  of  other  Governments 
less  able  than  our  own  to  pay  either  interest  or 
principal.  Reasoning  from  their  experience 
we  may  with  some  assurance  expect  to  place 
the  debt  at  four  per  cent,  rather  than  five,  as 
the  Secretary  proposes.  Whether  now  is  the 
proper  time  to  make  the  attempt  may  well  be 
questioned.  The  most  intelligent  financiers  in 
the  country  think  it  is  not.  They  think  it  best 
to  keep  the  debt  well  in  hand  and  wait  for 
specie  payments  and  a  full  return  to  the  normfcl 
condition  of  affairs  in  the  country. 

What  will  aid  both  a  return  to  specie  and  the 
desirable  placing  of  the  debt,  is  the  full  and  free 
exercise  of  the  spirit  of  economy,  now  happily 
uppermost  in  the  House.  I  cannot  but  hope 
that  it  will  not  exhaust  itself  in  general  reso- 
lutions, but  that  when  we  come  to  the  detail 
of  expenditure  it  may  be  found  in  full  force. 
I  believe  it  will,  and  I  look  to  this  source  with 
much  hope  for  aid  in  the  solution  of  these  diffi- 
cult financial  problems. 


Printed  at  the  Congressional  Globe  Office. 


